The Allahabad bench of the Income Tax Appellate Tribunal (ITAT) has recently directed the centralized processing center (CPC) to ensure compliance with natural justice principles mandatory under faceless schemes.
Assessee Umrao Singh Smarak Samiti, filed return of income for assessment year 2018-19 which was processed by CPC , Bangalore under Section 143(1) Income Tax Act 1961 wherein income of the assessed was assessed at Rs.94,60,424/- as against ‘NIL’ income declared by the assessee in return of income filed with the Revenue.
The CPC Bangalore denied the benefit of deduction under section 11 and 12 of the Income Tax Act 1961, and then assessee filed rectification application under section 154 of the Income Tax Act 1961 .The aforesaid rectification application filed by assessee was dismissed by CPC.Thereafter assesee again computed the income of Rs. 94,60,424/- The assessee being aggrieved by rectification order passed by CPC , filed appeal before Commissioner of Income Tax Appeal .Against the CIT(A) order assessee filed second appeal before ITAT.
While the written submission filed by the assessee states that it has filed both return and income and Audit report before the due date for filing the return and hence the deduction claimed under section 11(1)(a) Income Tax Act 1961 towards application of income is allowable.
Rabin Chaudhari, counsel for revenue submitted that the assessee has filed an audit report late and hence, the claim of the deduction under section 11 to13 of the Income Tax Act 1961 was rightly denied by authorities below.
After considering the contentions of the both parties the division bench of the ITAT comprising the Vijay Pal Rao, (Judicial Member)and Ramit Kochar, (Accountant Member) allowed the appeal filed by the assesse and observed that
“Appeal was decided under faceless scheme, but adherence to Principles of natural justice is one of the most important pillar of the effective judicial delivery system, as no person should be condemned unheard Thus, CIT(A) ought to have given an opportunity to the assessee so that the assessee may put forward his claim/contentions before CIT(A) as per the scheme/guidelines of faceless proceedings”.
Hence in the instant case, there was a clear breach of principles of natural justice, as the assessee was condemned by CIT(A) without providing proper opportunity to the assessee to explain its case.
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